9.31pm: Just in case anyone's still reading...Standard & Poor's just cut its credit rating on Greece to "selective default", or SD.

In a statement tonight, S&P explained that the move followed the Greek government's decisiont to add "collective action clauses" to its bonds. They give Athens the authority to force bondholders to take part in its debt restructuring, if they declined to take a voluntary haircut on their loans.

S&P said:

We lowered our sovereign credit ratings on Greece to 'SD' following the Greek government's retroactive insertion of collective action clauses (CACs) in the documentation of certain series of its sovereign debt on Feb. 23, 2012.

The effect of a CAC is to bind all bondholders of a particular series to amended bond payment terms in the event that a predefined quorum of creditors has agreed to do so. In our opinion, Greece's retroactive insertion of CACs materially changes the original terms of the affected debt and constitutes the launch of what we consider to be a distressed debt restructuring. Under our criteria, either condition is grounds for us to lower our sovereign credit rating on Greece to 'SD' and our ratings on the affected debt issues to 'D'.

S&P also said that it would raise Greeces' rating back to CCC if it successfully completes the PSI, or Private Sector Involvement, debt exchange.

However, should the deal still falter, the agency warned that "we believe that Greece would face an imminent outright payment default"....

8.05pm: Time for a closing summary.

•The German parliament has given its approval to Greece's second rescue package. MPs in the Bundestag voted the plan through by 496 votes to 90, with 5 abstentions. During the debate, Angela Merkel warned that Europe would face dire consequences if the Greek deal was blocked. However, she was criticised by opposition leaders, and a small number of her own MPs rebelled.

•Spain admitted that its deficit soared above target last year.At 8.5% of GDP, Madrid's government was nowhere near its target of 6%. The poor figures may bolster its case for less onerous fiscal targets.

•Opposition to the Greek plan gathered pace in Germany today, before the debate. Tabloid newspaper Bild called the package "madness" and urged MPs to block it. Angela Merkel's own interior minister had fanned the flames by arguing that Greece would be better off quitting the euro – comments that were criticised by a Greek minister.

•Proposals for German tax officers to be sent to Athens caused alarm in Greece. Athenians told us that the plan was unacceptable.

•Europe's bailout fund was put on negative watch by Standard & Poor's. S&P made the move after concluding that other European countries will not offer new credit guarantees to fill the void left by France, following the loss of its AAA rating in January.

•Greek businessmen began a counter-attack on criticism of the country. A campaign called "Give Greece a Chance" ran adverts in many newspapers in recent days, insisting that Greeks were largely hard-working, tax-paying individuals.

•In the bond markets, Italy sold debt at its lowest borrowing costs since September 2010. European stock markets ended lower, though, with fears over the oil price pushings shares down. The FTSE 100 finished 19 points lower.Thanks for reading, and your comments (particularly some very helpful corrections during the debate!). My colleagues will be back tomorrow morning. Goodnight!

guardian.co.uk

7.50pm: Some important late news from Spain. While Angela Merkel was pushing the Greek package through the Bundestag, Spain produced shocking deficit figures showing that it barely managed to cut its deficit at all last year.

Giles Tremlett, our reporter in Madrid, has the details:

Spain missed its EU-set deficit target by miles last year, with budget minister Cristobal Montoro revealing that it was 8.5% of GDP – compared to a target of 6 percent.

That was barely 0.8 percentage points down on the previous year, with out-of-control regional governments failing to cut their joint deficit at all.

This is dire news for a country already entering the second part of a double dip recession – and with unemployment at 23% Prime minister Mariano Rajoy, whose conservative People's party took power in December, has pledged to meet a 4.4% deficit target this year – which will require a total adjustment of some €45bn to €50bn. Income tax hikes and cuts earlier this year will acheive just €15bn of that. A sales tax hike now looks certain, but ferocious spending cuts also seem inevitable.

Rajoy's government has been lobbying for the EU to change its deficit target for this year. These figures may persuade hardliners in Brussels to ease up. Government sources have told me that they have identified a number of EU officials who are blocking their attempts to have the deficit target softened.

7.21pm: The long-running question of whether Greece has officially defaulted has moved another step closer to being resolved.

ISDA (the International Swaps and Derivatives Association) has announced this evening that its determinations committee has been asked "a question relating to the Hellenic Republic". It will announce at 5pm on Wednesday whether it wil accept this question or reject it.

The question relates to the 53% haircut that Greek bondholders will take on their loans. Will that plan trigger Greek credit-default swaps?

Full document covering 2nd Greek bailout package, German MPs voted on it today despite only receiving it over weekend twitter.com/OpenEurope/sta…

The paperwork ran to 726 pages, and was only handed to MPs over the weekend. Not, perhaps, enough time to fully digest the details and implications of the €130bn package, including details of various possible bond swaps, and the impact on Greece's debt sustainability.

6.31pm: Helen Pidd and Rupert Neate's story about the Bundestag vote is now live, here.

6.17pm: On the streets of Greece, my colleague Rupert Neate has found plenty of public animosity to Germany today.

Fidaki acknowledged that Greece needs to be reformed, but argued that the troika are missing the obvious target - the rich:

The people that have the money are the ones that don't pay. The normal people pay their taxes. But the rich don't pay...they have the money to avoid it. If I don't pay my taxes I would go to jail....If I become rich I would find a way not to pay.

Businessman Simeon LeFineviotis agreed that anti-German sentiment was on the rise in Athens:

There is bad feeling towards Germany. It is like someone coming into your house telling you how to live your life. No, don't make your coffee like that - do it like this. Don't sit on your chair that way - sit up straight.

And regular blog reader James Wilkins says that today's Bundestag vote will being no relief to Greece:

Living in Greece is like living in death row. You know that, bar a miracle, it (default) will happen. You just don't know when it will happen and how painful it is going to be. And what has been decided in the Bundestag today makes no difference to the final outcome. And just as in death row justice is doubtful.

Many families who never had debts are now destitute because of the Troika's measures. They are being punished because they are being held to account for more than €100,000 which they, theoretically, owe the world (around €38,000 per person ) This is in large part due 18 months of the EU prevarication during which time compound interest plus the rating agencies have caused the debt to multiply.

It is not possible, and if it were it would be self defeating, to screw more money out of poor Greeks.

5.48pm: Here's a picture of Angela Merkel taking part in this afternoon's ballot.

Photograph: John Macdougall/AFP/Getty Images

As usual, the chancellor was surrounded by plenty of supporters, with several seemingly keen to make sure she cast her vote correctly.

5.36pm: There's more than a little confusion on the news wires about whether Angela Merkel triumphed without the votes of the German opposition in the Bundestag.

As mentioned at 4.41pm, Merkel's coalition needed 311 votes for absolute victory, and controls 330 seats, so a rebellion of 20 MPs would have left the chancellor relying on the opposition.

We initially thought that Merkel had achieved the 'Chancellor's majority" but there are now suggestions from Germany that several of her own side missed the vote through illness.

The latest word is that Merkel got 304 votes from her own coalition parties, out of 591 votes cast (that's via Linda Yueh of Bloomberg):

Merkel was short of politically sensitive "chancellor's majority (311 out of 620 seats) coalition mustered majority of 304 of 591 votes cast

So she fell short of the absolute majority, but would still have won the vote if the opposition parties had voted the other way.

[Full disclosure - this blog entry had been tweaked a few times]

5.22pm: Just in – Standard & Poor's has revised the European Financial Stability Facility outlook to negative.

That follows its decision to downgrade France (one of the EFSF's main backers) from AAA to AA+. The EFSF had lost its own AAA rating following that move, but S&P had initially left the Facility's outlook as 'developing'....

In a statement, S&P said it had made the move after concluding that:

Credit enhancements sufficient to offset what we view as the reduced creditworthiness of European Financial Stability Facility are not likely to be forthcoming.

The EFSF is used to finance Greece, Ireland and Portugal since they took IMF-EU-ECB rescue packages. A lower credit rating would push up its borrowing costs (although the EFSF should be replaced by the ESM this summer).

5.02pm: There's little reaction to the German vote in the City, where the London stock market had closed for the day shortly before the result came in.

The euro had strengthened during the debate, perhaps as it became clear that there wouldn't be a sizeable rebellion against Greece's €130bn package. From $1.336 during Merkel's speech, the euro is now trading at $1.341 against the US dollar.

The German parliament approved the bailout quite easily. Probably they assumes it will never happen...

4.51pm: From Berlin, my colleague Helen Pidd comments:

Angela Merkel has persuaded the German parliament to ratify the second Greek bailout, despite admitting the plan to rescue Greece was risky and could yet fail.

"The way ahead for Greece is long and is, truthfully, not without risks," the German chancellor told the Bundestag, the German parliament, before the vote on Monday. "No one can give a 100% guarantee of success."

Helen also cites one of Merkel's best quotes fom the speech.

The founding fathers of the EU built the European Union with strength, ideas and courage. They learned lessons from bloody centuries of suffering in Europe and built a Europe anchored in peace and freedom. They didn't do that just for themselves, but also for future generations.

Now it is up to us – with strength, ideas and courage – to write the 21st century chapter of European history Not just for us, but also for our children and grandchildren.

guardian.co.uk

4.41pm: The votes are in, and it's a big win for the German government.

The Greek package has been approved with 496 votes in favour, 90 against, and five abstentions.

Back-of-the-envelope calculations suggest that Angela Merkel did not suffer a major rebellion from her own coalition. The left-wing Die Linke party has 76 MPs, so if they all opposed the bill then that would leave 19 votes against/abstentions from other parties.

Update: As explained earlier, Merkel's coalition had 330 seats in the Bundestag and needed 311 votes for victory, so if 19 MPs did rebel, that would have put her on the knife-edge for victory with/without opposition support....

4.29pm: Voting is taking place now....

4.21pm: Two members of Angela Merkel's coalition have attacked the Greek deal in the last few minutes, as the Bundestag debate heads towards the vote.

Klaus-Peter Willsch of the Christian Democratic Party told the Bundestag debate that he fears his party is taking the wrong decision. He said he could not support the package for Greece, saying he believed it was 'economically wrong'.

Frank Schäffler of the Free Democratic Party (the FDP, the junior partner in the administration) was even more critical. He said nothing had improved in Greece, indeed everything has got worse.

Frank Schäffler of the FDP, speaking in the Bundestag debate on the Greek aid package on 27 February 2012. Photograph: Bundestag

Schäffler added that Germany should 'quit the eurozone', as Greek military spending is increasing. However, his speech received only isolated, lonely clapping, and Merkel appeared to deliberately pay him no attention.

Merkel totally dissing Frank Schaeffler, a rebel from her coalition, by deliberately chatting and wandering around during his speech

4.06pm: The Greek aid debate is continuing in the German parliament, with individual MPs addressing the Bundestag. But there's an interesting development to flag up: the eurogroup of eurozone finance ministers will meet this coming Thursday at 2pm CET (1pm GMT) to "take stock" of Greece's progress since the deal agreed a week ago.

The meeting, called by eurogroup head Jean-Claude Juncker, will examine how the bond-swap with Greece's private creditors is progressing.

It will set the tone for a two-day EU summit that also begins on 1 March.

3.26pm: The chairwoman of the German Green party has criticised Angela Merkel for acting like a modern-day Margaret Thatcher.

Renate Künast of the Green party. Bundestag

Renate Künast accused Merkel of playing the "Iron Lady", in her refusal to bow to criticism. She added that the chancellor is losing control of her cabinet, citing Hans-Peter Friedrich's suggestion that Greece should leave the euro.

Like Peer Steinbrück of the SDP, Künast said a financial transaction tax should be used to fund a growth-focused rescue package for Greece, and also called for a new Marshall Plan for the country.

3.17pm: More drama in the Bundestag. Gregor Gysi, head of socialist party Die Linke, has compared the Greek package to Germany's war reparations after the first world war.

Gysi told the Bundestag that:

You're giving Greece Versailles when it needs a Marshall Plan.

Several German MPs seemed shocked by the analogy, according to Open Europe which is also tracking the debate.

Gysi's Versailles analogy has not gone down well. CDU's Volker Kauder said it has left him "speechless" #Bundestag

Historical note: the Treaty of Versailles was signed in 1919, and included very heavy penalties and restictions on Germany, which was held responsible for the conflict. The country lost territory and faced restrictions on its future armements, as well as a huge war reparations bill.

Rainer Brüderle of the FDP. Bundestag

2.56pm: Now, Rainer Brüderle of the Free Democratic Party (FDP) (the junior party in Angela Merkel's coalition), is addressing the Bundestag – and rebutting Peer Steinbrück's call for a Plan B for Greece (see 2.48pm)

Brüderle dismissed the proposal of a new growth package for Greece funded by a transaction tax on the banks, arguing that Greeks do not need more money, they need structural reforms.

Brüderle also opposed the idea of increasing Europe's bailout fund, saying that investment in Greece must come from "private, not public sources".

2.52pm: Despite criticising Merkel, Peer Steinbrück pledged his party's support for the Greek package. It may be flawed, but the SDP will vote for it because the alternative is, as the chancellor herself warned, worse.

2.48pm: Peer Steinbrück proposed an alternative solution to the diet of austerity being handed to Greece.

He said his party would devise and implement growth programme for Greece & other Mediterranean countries. It would be funded by "a tax on financial transactions".

Steinbrück, of the Social Democrats, told the Bundestag that the chancellor had been fixated on austerity and failed to grasp the scale of the challenge facing Europe, calling her crisis management "too little, too late".

Steinbrück condemned the fiscal adjustments being forced on Greece, saying "thumbscrews" would not fix the country's problems.

Steinbrück (who, like Merkel, has attracted some heckling) predicted that German MPs would soon be gathered in the chamber to discuss an increase in the EFSF and the ESM (despite Merkel's denial - see 2.26pm)

UPDATE: Many thanks to all those readers who kindly pointed out my error. Peer Steinbrück is not the German opposition leader. Now fixed.

The chancellor told the Bundestag that there was "No need to increase EFSF & ESM funds."

That looks like a straight rebuff to the G20, which yesterday said that it would not provide more help to resolve the eurozone crisis until Europe itself has "reassessed" its own firepower.

Many other EU nations, including the Dutch, want the combined ESM/EFSF to be increased to €750bn, but Germany remains adamant that the €500bn limit should hold.

Merkel did say, though, that Germany will pay €11bn of its contribution to the European Stability Mechanism (ESM) this year, and could pay the second half of the bill in 2013. So, not suggestion that Germany would hold back on its commitments.

She also insisted that the aid promised for Greece would make the country more competitive. Austerity, though, cannot be avoided.

2.21pm: Angela Merkel has moved onto long-term solutions to the eurozone crisis.

She says it is essential that the fiscal compact [tougher budget rules across the eurozone] is rapidly ratified, and insists that closer political union will also restore confidence in the euro.

She also touches on the growth issue, saying that increased flexibility in the way that EU structural funds are spent could help promote growth and competitiveness.

2.14pm: Heckling! Angela Merkel was briefly distracted by chuntering from within the Bundestag after she said that she knows there are some peopel who think the Greeks should return to the drachma and quit the euro....

...her own interior minister, for starters.

But the Chancellor isn't put off her stride for long. She insists that rejecting the bailout would certainly cause great damage, affecting Portugal and Ireland and adding to contagion across the region.

In essence, Merkel's message is:

Saving Greece is in Europe's interest and therefore in Germany's interest.

2.11pm: Merkel moves onto Greece, telling German MPs that the country has made progress in the last couple of years.

But she admits that the bailout is not without risks.

UPDATE: Here's the key quote from Merkel:

There is no 100% guarantee that the second bailout programme will succeed.

Chancellor Angela Merkel. Bundestag

2.06pm: Chancellor Angela Merkel begins by telling German MPs that there is no single, one-off solution to the eurozone crisis.

The idea of a quick solution to the crisis is just an illusion, she says. But the consequences of failure are severe: The European Union will fail if the euro fails.

She tells the Bundestag that Europe is "united in agreement" over the causes of the crisis. Now, she insists, the EU must work together towards building a stable union. That, though, will take several years.

1.50pm: Political developments in Greece – the minister responsible for the country's police, Christos Papoutsis, has resigned.

Not, though, in protest at the Greek rescue package, or because of the occasionally violent protests on the streets of Athens. Instead Papoutsis (whose official title is Citizen Protection Minister) is stepping down to run for the leadership of Pasok, the socialist party.

Associated Press reports:

Papoutsis, 58, will represent the traditionalist wing of the socialist party in the election. Vice-premier and Finance Minister Evangelos Venizelos is the favorite to win.

•In the bond markets, Italy's borrowing costs fell to their lowest level since September 2010. The successful auction came as data showed Italian and Spanish banks have been buying record amounts of government debt.

Photograph: Oli Scarff/Getty Images Europe

1.05pm: If you're looking for something to read this lunchtime, can I recommend this piece by Megan Greene of Roubini Global Economics?

She just returned from her latest trip to Athens, and reports a "pronounced shift" in public attitudes to the crisis. Interestingly, people aren't just worried about themselves – they are concerned about the impact on the generations above or below them:

Every person has a story either about a pensioner who is forced to pay ever higher property taxes while his pensions are rapidly shrinking and prices continue to rise, or of a younger friend or sibling with multiple master's degrees who has had to work in call centres or cafés because there are no job openings commensurate with his experience....

Many of the Greeks with whom I spoke also expressed a visceral bitterness towards the troika. This underlies the epic breakdown in trust between the troika and Greece, which has recently been reflected in the discourse between the two sides as they have negotiated a second bailout. Troika representatives have clearly noted the antagonism with which they are met in Athens, as they have quadrupled the number of bodyguards in their entourages over the past year.

But despite the pain and anger, Greene still found that most Greeks "express desperation to stay in the eurozone".

Elisabeth Afseth of Investec pointed out that this puts the ball firmly back into Germany's court:

Germany remains opposed to letting the EFSF and ESM run concurrently to their full capacity, with a change in stance likely to be required before any non-eurozone countries commit to providing additional funds.

For some time American investors have taken the view that it is too time consuming trying to keep up with every development in the Eurozone crisis, that there are just not enough hours in the day to fully understand what is going on and therefore it is best to keep out or take very few positions. Maybe European market players are also coming to same view.

12.20pm: The Greek package also needs to be approved by parliaments in the Netherlands and Finland; the Bundestag isn't the only hurdle left to cross.

Debate is due to start in the Netherlands parliament tomorrow. The deal should be approved, but there may be some political manoeuvring. As Reuters explains:

The Dutch government, a minority coalition between the Liberal and Christian Democrat parties, usually relies on the opposition Labour Party for support in such debates because its main ally, Geert Wilders' Freedom Party, strongly opposes bailouts for Greece and other eurozone peripheral economies.

We saw last week that the Dutch are also very concerned about the situation in Greece (finance minister Jan Kees de Jager called for a permanent troika presence in Athens), so the debate could be quite lively.

In the reader comments, IfigEusLannuon pointed out that the "Greece is Changing" campaign (see 9.06am) is targeting the Dutch audience:

Those guys paid for a full-page ad in this Sunday's Le Monde. Those are greek big businesses (CocaCola Hellenic, OTE, others according to Kathimerini) wanting to present Greece reforms in a positive way to the rest of Europe. The choice of languages for the website is indicative of the target: English, Deutsch and French, but also Nederlands, probably because Netherlands has a biggest share of euroseptics than other.

11.58am: Greek cultural & tourism minister Pavlos Yeroulanos has hit back at claims that Greece should leave the euro.

Yeroulanos told CNBC that such criticism could destroy the deal agreed last week, plunging Europe into a fresh crisis. He also appeared to take a swipe at German interior minister Hans-Peter Friedrich (who proposed making Greece an offer it couldn't refuse).

Yeroulanos said:

Germany needs the euro just as much as Greece does. They need to decide whether they will make a real commitment to the euro, which has been a great thing for the German economy.

We have taken some very important moves towards a stronger union, and then we see statements by people which undermine the steps that the EU made.

11.32am: Should Germany send tax officials to Greece?

We wouldn't normally presume to ask, but it emerged over the weekend that more than 160 German tax collectors have volunteered for possible assignments in Greece. Their mission, should Athens choose to accept them, would be to help the Greek authorities gather tax more efficiently.

There is historical precedent – after reunification, West German tax officials were dispatched to the East to help improve revenue collection. But as Norbert Walter-Borjans, finance minister for the state of North Rhine-Westphalia, conceded:

There was resistance then among some eastern Germans against western (tax collectors) but that's nothing compared to the reservations Greeks will have against Germans.

11.17am:Angela Merkel is expected to cruise through this afternoon's vote in the German parliament on the second Greek bailout.

Around a dozen MPs are expected to rebel, but Merkel should still be able to rely on opposition votes, if needed.

Helen Pidd has the latest from Berlin ahead of the vote (expected around 4.30pm GMT):

Even the CDU's Wolfgang Bosbach, the most high profile of the dozen or so government rebels who will vote "no" today, has told reporters that he expects the vote to pass without Merkel having to rely on opposition support. But that doesn't mean the German cabinet is fully supportive of the plans to save Greece.

As reported earlier, the interior minister, Hans-Peter Friedrich, has become the first minister to say Greece would be better out than in the eurozone. The Süddeutsche Zeitung reports that Friedrich is not a lone dissenter. The left-leaving daily claims both the finance minister, Wolfgang Schäuble, and the economy minister, Philipp Rösler, are among those in the government who privately do not believe in the current strategy for keeping Greece from the brink. Neither are quoted in the front page story, which also claims the German chancellor is determined to avoid a Greek exit from the euro because of the deleterious knock-on effect it would have on the German economy andbeyond.

Among the German population, bailing out Greece is becoming ever moreunpopular, Helen adds:

A poll in Bild am Sonntag newspaper found 62% of Germans are against the €130bn rescue package while 33% are in favour. In a similar poll in September, 53% were opposed and 43% in favour.

11.03am: The German cabinet met this morning ahead of the Greek debate (which begins in around three hours time).

10.39am: Critics of the European Central Bank's policy of pumping liquidity into Europe's financial sector through low-cost three years loans may be interested in this:

Italy and Spain's banking sectors both spent record amounts buying up eurozone government debt last month. Spanish banks spent a total of €23.1bn on eurozone sovereign debt in January, with Italy's snapping up another €20.6bn.

The data doesn't show which country's debt they bought, but both Spanish and Italian debt has strengthened this year (as today's Italian auction showed). Megan Greene of Roubini Global Economics commented on Twitter that banks would generally have bought up their own national debt.

It's quite a trick -- the ECB lends huge amounts of euros at 1% to European banks, who snap up the loans and use the proceeds to buy higher-yielding bonds (Italian 10-year bonds, for example, yield 5.4% despite rising in value this year). The banks get a guaranteed profit, Europe's peripheral countries find willing buyers for their debt, and the ECB resists pressure to take more dramatic measures such as quantitative easing.

10.33am: More government debt sale action -- Germany sold €2.545bn of 12-month bills at a yield of 0.0768% (very slightly higher, but still in 'ultra-safe' territory).

10.15am: The first results from this morning's government debt auctions are in -- and Italy has sold €8.75bn of six-month bills at a yield (the effective interest rate) of just 1.2%, down from 1.97% in January. That's the lowest level since September 2010.

Italy also sold €3.5bn of nine-month bills, at an average yield of 1.29%.

Some relief for Italy after this morning's poor business confidence survey, but it's hard to read too much into it, given how much ECB-funded liquidity is sloshing around the markets.

For a more sobering statistic, check out FTSE volatility index - which measures fear in the London stock market. It jumped by more than 10% this morning, which Josh Raymond of City Index says is a worrying sign:

That's the suggestion from the latest M3 money supply data from the ECB this morning (the broadest measure of money supply, including physical currency, savings accounts, and money in large and long-term reserves). Today's M3 data showed that money supply rose by 2.5% in January on an annual basis.

It also showed a small rise in lending to households, while loans to European firms stabilised.

With another splurge of cheap cash from Mario Draghiahem, ECB Long Term Refinancing Operation taking place later this week, economist are hoping that business and household lending will pick up. As Howard Archer of IHS Global Insight points out, that could prevent the ECB from cutting rates again next month:

The stabilization in Eurozone private loans and rise in money supply in January reinforces already strong belief that the ECB will keep interest rates at 1.00% at their March policy meeting, particularly given some recent improved survey data.

Even so, we still expect interest rates to be eventually trimmed from 1.00% to 0.75% as Eurozone economic activity remains soft overall and fragile.

guardian.co.uk

9.38am: Italian business confidence has slumped to its lowest level in 27 months.

Data released at 9am showed that Italian business morale fell by more than economists has expected in February, to 91.5, on national statistics body ISTAT's survey. It hasn't been lower since November 2009.

The data reinforces fears that the Italian economy will shrink for most of 2012. There's a fine graph here (by Reuters' Scott Barber), showing how business confidence is a good forward indicator of GDP.

In contrast, German business morale hit a seven-month high last week, as its business leaders took heart that the worst of the crisis was over.

9.22am:Helena Smith (who is supposed to be on a well-earned break) also reports from Athens that Greece is reeling from revelations that several politicians had added to the capital flight that has exacerbated the country's fiscal woes by transferring substantial deposits abroad in the last two years.

Helena says:

One MP is believed to have moved €1m euros to the UK just when the finance ministry was desperately trying to halt the flight in May last year. Of the €65bn euro whisked out of banks since late 2009 some €16bn ended up overseas, according to finance minister Evangelos Venizelos.

None of the MPs have as yet been identified, prompting the Greek media to demand that they step forward - starting with the man or woman of the "missing million."

Helena says it will be interesting to see if any of the so called offenders 'out themselves' by the time she returns from holiday next week. After all, she says, the latest campaign to win over public opinion (see previous post) makes the point that this is the chance to "create a new Greece. A modern, productive and creative Greece with a sustainable future in Europe."

9.06am: Over to Greece, where a new campaign called "Greece is Changing" has been launched, with full page adverts in many newspapers – including Germany daily papers.

Helena Smith, our correspondent in Athens, says the initiative shows that Greeks are determined to win over the hearts and minds of critics abroad. She explains:

Under the banner headline "Give Greece a chance", prominent Greek business people funding the campaign emphasised the sacrifices made over the last three years "by every Greek under the toughest austerity package in modern history."

And they insisted that debt-choked Athens was committed to reform, recovery and future growth despite the "dramatic impact" of such robust change on "the life of every Greek."

Give Greece A Chance

As you can see above, the advert recognises that Greece faces further hardship, but also criticises the stereotypes that they say are unfairly pinned on Greeks.

We are hardworking, tax paying citizens unfairly labelled with sterotypes so easily handed out to Greeks today ... All we are saying is give Greece a chance.

Catchy, eh?

8.44am: Germany's interior minister has become the first member of Angela Merkel's cabinet to suggest Greece should leave the eurozone.

Hans-Peter Friedrich. Photograph: Soeren Stache/EPA

Hans-Peter Friedrich broke ranks in an interview with Der Spiegel, in which he says: "Greece's chances of regenerating and becoming competitive are definitely greater outside the eurozone than in."

Friedrich added:

I'm not talking about kicking Greece out, but to create incentives for a departure which the Greeks will find hard to pass up.

Friedrich is one of the weaker ministers in the German government – he belongs to the CSU, the Bavarian sister party to to Merkel's Christian Democratic Union (CDU) and isn't taken desperately seriously in Germany. Chances are, he was just flexing his muscles for the CSU's conservative supporters in Germany's rich south, most of whom are rabidly against the Greek bailouts.

Nonetheless, it cannot be comforting reading for the Greeks. As a Spanish colleague from El Pais put it to me, Friedrich's phrasing has sinister tinges of Marlon Brando's line in The Godfather: "I'm gonna make him an offer he can't refuse."

But Germany's foreign minister today brushed off all speculation about a Greek exit. "I don't understand the political speculation about a Greece outside the eurozone," Guido Westerwelle told Die Welt.

guardian.co.uk

8.24am: European stock market have fallen in early trading.

The FTSE 100 dropped 30 points to 5905, a fall of around 0.5%. Other markets fell by similar amounts, with the German DAX and French CAC both down around 0.7%. This follows a lacklustre performance in Asia.

The recent rally in oil is still causing concerns, with traders saying the high prices could hamper the global economy. As Michael Hewson of CMC Markets explained, Europe is particularly vulnerable to an oil shock.

This surge in prices has raised concerns that it could choke off the recent improvement in US economic data, as well as make economic conditions in Europe worse than they already are, especially in the periphery, where Greece, Spain and Italy remain particular vulnerable to the Iranian oil embargo.

8.21am: Angela Merkel should win this afternoon's vote, but the big question is whether she suffers a significant rebellion.

It would only take a few more rebels to leave Merkel dependent on opposition votes – not a comfortable position for the chancellor. Her coalition controls 330 seats in the Bundestag, and needs 311 votes for victory.

Photograph: Thomas Peter/Reuters

Members of Merkel's Christian Democratic Union (CDU) party were vocal about their concerns over the weekend. As Reuters reported:

"Quite clearly the mood in Germany is turning against further rescues for Greece," Klaus-Peter Willsch, a leading dissident on Greek aid in Merkel's Christian Democrats (CDU), said in an interview with Reuters on Sunday.

"But that's not surprising. This is all deja vu for the public. We've been promised all kinds of things that aren't fulfilled and then a few months later there's the need for another rescue package. The public's faith is fading fast."

An opinion poll published yesterday found that 62% of Germans oppose the new Greek deal.

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8.04am: Here's today's agenda:

•Today's debate in the Bundestag over Greek loan deal begins at 2pm GMT (3pm CET). Angela Merkel will open the debate, with a vote taking place later this afternoon.

Debt auctions due this morning:•Italy: €12.25bn of short-term bonds•Belgium: up to €2.9bn of long-term bonds.•Germany: €3bn of 12-month bills•France: Treasury bill sale

8.00am: Good morning, and welcome to our rolling coverage of the eurozone debt crisis.

Today, Germany will decide whether it supports the financial aid programme which was agreed by euro finance ministers a week ago. The vote takes place in the Bundestag (the lower house) this afternoon. The package is expected to be passed, but Angela Merkel may suffer a rebellion from her own side.

The vote is overshadowed by a warning from Germany's interior minister that Greece should quit the euro (of which more shortlyhere).

And in the bond markets Italy, Belgium, France and Germany are all holding debt auctions. With banks gearing up for another massive offer of cheap loans from the European Central Bank later this week, they are likely to go well. But we'll see....